Business Law Research Paper Example | Topics and Well Written Essays - 750 words - 5

Business Law - Research Paper Example For any business or corporation to expand, agents are required in dealing with the third party on behalf of the employer (Jennings, 2012). Thus an agent is accorded authority to represent the principal when dealing with a third party. An agent may act implicitly or apparently, and thus the principal is bound to be liable to the agent’s actions and conducts when acted within the authorities accorded to him. The principal may also incur liability when the agent intentionally harms a third party (Jennings, 2012). The principal and the agent are liable for any loss or damages caused to the third party if the agent and principal’s identity are partially or fully undisclosed when dealing with the third party. A principal must indemnify the agent for any damages caused to third party if the agent acted within the actual authorities confided to him. The agent though, must indemnify the principal of any payments for any authorities exercised outside the stipulated actual or apparent authorities allowed. Fraud, extortion and other ills though may befall the third party when an agent assumes inherent powers by virtue of agent – third party relations. A popular and good example of this kind of scenario i s the Colorado Supreme Court case of Grease Monkey vs. Montoya (Jennings, 2012). Grease Monkey Holding Corporation is a Utah based corporation and Grease Monkey International Company is a fully owned subsidiary of Grease Monkey Holding Company. Arthur Sensenig was the President, Chief Operations Officer (COO) and Chairman of the Boards of Grease Monkey International, Inc. on a period between 1983 through 1991. He had broad authorities and acted as agent and chief officer of Grease Monkey. Sensenig was mandated with raising capital from banks and other lenders, up to $500,000 without the Boards approval (Davant, 2002). Between 1983 through 1991 Sensenig was able to extort money from Nick and Aver Montoya under the guise that it was an investment to Grease Monkey.